CIRS Summary: How to Comply with the Pilot Policy of Expanding 10 New Free Trade Zones (FTZs) for the Import of Non-special Use Cosmetics

CIRS
held a free webinar
(download) on 26th and 27th Apr, 2018 on How to
Comply with the Pilot Policy of Expanding 10 New Free Trade Zones (FTZs) for
the Import of Non-special Use Cosmetics. The presentation includes 3 parts:

1) General
info of pilot system in Shanghai Pudong new area and comparison with CFDA
registration

2) Data
analysis of record keeping in Pudong new area

3) Brief
introduction and outlook of expanding 10 new free trade zones for the import of
non-special use cosmetics.

Background

In
order to implement the State’s decision making to unleash the vitality of companies’
innovation and entrepreneurship, and to
promote a legalized, internationalized and facilitative business environment,
the government decided to make a number of modifications on administrative
licensing and decided to run it first in Pudong, Shanghai, and would expand to
other cities if things went well.

On
17th Jan 2017, CFDA and AQSIQ jointly issued a “Notice on Pilot
Implementation of Record-Keeping for Imported Non-Special Use Cosmetics in
Pudong New Area” (Notice No. 7). On 18th Jan, CFDA issued
another “Notice on Work Program of Record-Keeping for Imported Non-Special Use
Cosmetics in Pudong New Area” (Temporary Notice No. 10) which gives clearer and
more specific requirements. Later on 23rd Feb, CFDA issued an
official “Clarification on the Work Program of Record-Keeping for Imported
Non-Special Use Cosmetics in Pudong New Area” (Temporary). The Clarification
explains the differences between the record-keeping system and registration
with CFDA.

Scope

First
launched in Pudong, Shanghai

Implementing
time: 1st Mar 2017 – 21st Dec 2018

Only
for import non-special use products, first importation

Importation
can only happen at the corresponding port

Overseas cosmetic company should have responsible person(s) registered in the
corresponding area

Cancellation
of current record-keeping is required if the product is to be imported through
other ports, re-do the record-keeping in another FTZ where the port is, or
registration with CFDA is required

Procedures

Comparison
with CFDA Registration

Data
Analysis

By
the end of last month, there are a total of:

212
usernames

136
responsible persons

192
overseas manufacturers

From
30 countries and regions, plus 20 domestic companies with their products
produced outside China

We’ve
summarized the data from Mar. 2017 to 20th Apr. 2018 and analyzed as
below.

678
record-keeping numbers given out in 2017, and there are already over 520
numbers issued in 4 months time this year

Compared
to the total number of products registered with CFDA last year - 13,785, there
is less than 5% of total import products recorded under the pilot system last
year.

We
shall foresee an increase of this percentage this year as more companies are
more familiar and have more confidence in the new system

In
2017, after a blank period of only 5 products obtained the record-keeping
number in the first 2 months, there is a general growing trend of the numbers.
At first, most of the companies trying this pilot system are the big companies.

Approval
Passing Rate

Overall (from
Mar 2017)

~ 1/3

2018

1st

2nd

≥3rd

56%

29%

15%

Overall
passing rate – 1/3, which means there are over 3,000 products that have applied
under this system

The
passing rate of this year increases, to over 50%, with no amendments needed.
And about 85% of products have been approved after single time amendments,
which makes the passing rate quite satisfying compared to last year

Here
below is a pie chart of the No. of record keeping numbers by country and
region. As we can see from the chart, Korea has the largest number, consists
about 39% of the total. France and the US
are the 2nd and 3rd, followed by Japan. The top 4
countries have covered 96% of the products recorded in Pudong.

Regarding
countries, about half of the countries are from Europe.

The
bar chart below listed the top 10 manufacturing companies in regard to product
numbers that have been recorded in Pudong. LG Household & Health Care is at
the dominant position, doubles the number of products recorded by Chanel who is
in the 2nd place. Nars from Shiseido and Shiseido itself have been separate
listed, in the 3rd and 6th place respectively. Estee
Lauder, The Face Shop, Elizabeth Arden, and Lancome have similar numbers, with Korderma and YSL in the 9th and
10th places. We can see that the top companies are mostly the
well-known companies.

Typical
problems especially for the pilot system

Products
should be cosmetics (used on healthy skin) and non-special use products

Hair-dye:
can be regarded as non-special use products if the color can be washed off
immediately after dying

Whitening
products: physical whitening products, e.g. covering, are still considered as
special use products

Anything
changes on packaging and Chinese label should be renewed as these are public
information

Outlook of
Expanding the Pilot Policy

After
more than a year’s implementation of the pilot system, everything’s going
smoothly according to Shanghai FDA, and the government thinks that the system
can be copied and pasted to other FTZs. Therefore they issued a notice on 8th Mar 2018 to expand the pilot system to 10 other FTZs in China.

The
10 FTZs include Tianjin, Liaoning,
Fujian, Henan, Hubei, Chongqing, Sichuan, Shaanxi, Guangdong, and Zhejiang. Among these 10 FTZs, Guangzhou
and Zhejiang have already issued their notices to open the pilot system.

Zhejiang Zhoushan FTZ

120km2 implementing area

Issued
their notice on 6th Mar

Held
the press conference of launching the system, and the 1st record-keeping number of Zhejiang was issued

Having
the 2nd largest number of cosmetic
factories in China

Guangzhou Nansha
New Area FTZ

60km2 implementing area

Issued
notice on 11th Apr

Implementation
time: 8th Mar 2018 – 21st Dec 2018

Having
the largest number of cosmetic factories
in China

To
overseas manufacturers, the expansion of the system enables you to import
through varies ports in different cities for different products, and you can
have responsible persons in different cities. The market entrance permit in
this way is less time-consuming and the process is easier.

The responsible person will take good responsibility for the products, including marketing
activities and product safety. Competent authority will carry out their on-site
supervision regularly. This results in a more stringent on- and post-market
surveillance. Authorities will build-up an enterprise integrity system in the
near future to grade the companies.

As
FDA and CIQ have been combined to one department, they will have close contact and information exchange, this
will make the process more efficient as well as having more rigid check on the information to avoid mismatch and result in
misleading to our customers.

More
details will be coming for these cities soon, and CFDA may issue further notice
on what happens after the implementing time. We will keep updating the latest
regulations. You can check on our website regularly or subscribe to our
newsletter for any updates.